Listen up – we are not in recession

Aug 7 2008 by Bill Midgley, The Journal

AS there is a reduced amount of news in what is usually referred to as the silly season, it is perhaps not surprising that there is a concentration on a narrow range of events, and perhaps too much time for thought and debate that is not good for some issues.

In recent weeks we have heard a great deal about the so-called recession in the UK economy and particularly its impact in the North East.

For the avoidance of doubt, the economy is not in recession. Admittedly it is experiencing a reduced rate of growth and we may well find that as we move into 2009 there is a real recession, but that has yet to happen and there are strong factors to indicate that it may never occur.

While a lower rate of growth undoubtedly brings its problems, certainly with a cutback in employment and investment in business as owners see an uncertain future, there remains a need to keep a sense of perspective.

Low growth may be something we have to live with for a while, but it’s hardly a disaster. And while we may bemoan our current economic situation, it is more likely that the eurozone will hit recession before we do.

Similar prophets of doom affect the property market. Perhaps not surprisingly those so-called experts, who little more than a year ago were forecasting that the increase in prices would go on ad infinitum, are now leading the way with their estimates as to how far the market will fall.

Again a sense of perspective is required, and while there may be some way to go before we hit the bottom of the current fall in prices, the representatives of the house- builders are already forecasting marked increases over the next five years.

With a population that has an increasing life span, more single family units and an increase in the numbers of people living in our region, there will inevitably be an upward demand for housing. Those mortgage lenders who we are told are withdrawing from the market will certainly be back in volume in the very near future as they only make their money be attracting new customers.

Some problems ahead, but not quite the doom and gloom that many would have us believe.

The economy is still growing and perhaps as we move into the autumn we might just realise that keeping a real sense of perspective is a far better way of looking at the realities rather than talking ourselves into a real recession.

Bill Midgley is a North East business executive and former chairman of the British Chambers of Commerce